Google is buying smartphone maker HTC’s assets for $1.1 bn

TAIPEI: Taiwan’s struggling smartphone maker HTC said Thursday it was selling part of its smartphone business to US technology giant Google for $1.1 billion.

The deal includes intellectual property licensing and half of its research staff, or around 2,000 people, and is expected to be completed in early 2018 pending regulatory approval, HTC said.

“For Google, the deal will further strengthen its investment in and commitment to smartphones and its hardware business… it shows that Google sees Taiwan as a key hub for innovative technology,” HTC spokesman Peter Shen told a press conference in Taipei.

Reuters adds: “HTC is past its prime in terms of being a leading hardware design house, mainly because of how much it has had to scale back over the years as because of declining revenues,” said Ryan Reith, an analyst at research firm IDC.

“Unless Google really wants to control hardware for its other businesses like Home and Chromebooks in addition to smartphones, then I don’t see this as being a bet that pays off.”

The deal marks Google’s second major foray into smartphone manufacturing. It purchased Motorola Mobility for $12.5 billion in 2012 and sold it off to China’s Lenovo Group Ltd for less than $3 billion two years later.

“It’s still early days for Google’s hardware business,” Osterloh said in a blog post, adding it is focused on bringing together the best of Google software and hardware for a suite of its core products.

Other hardware initiatives include its acquisition of thermostat maker Nest for $3.2 billion in 2014, while product launches include voice-controlled speaker Google Home and virtual-reality device Daydream View.

Google’s strategy of licensing Android for free and profiting from embedded services such as search and maps has made Android the dominant mobile operating system with some 89 percent of the global market, according to IDC.

But it has long been frustrated by the emergence of many variations of Android and the inconsistent experience that has produced. Pushing its own hardware will likely complicate its relationship with Android licensees, analysts said.

HTC shares were on a trading halt on Thursday. The stock has suffered steep declines over the past couple of years. It has fallen 12 percent so far this year and the company is worth around $1.9 billion.

HTC’s worldwide smartphone market share declined to 0.9 percent last year from a peak of 8.8 percent in 2011, according to IDC. Google’s Pixel had less than 1 percent market share since it was launched a year ago, with an estimated 2.8 million shipments, IDC estimates.

The transaction, which is subject to regulatory approvals, is expected to close by early 2018.

Evercore served as financial advisor to HTC and Lazard served as financial advisor to Google. – Agencies